Bao v Li (No 3)

In the matter of Bao v Li, the respondent, a practising lawyer, sought a special costs order from the court against the applicant, an individual who had been involved in protracted litigation with the respondent. The applicant had filed several unsuccessful applications, leading the respondent to apply for indemnity costs and a gross sum costs order. The matter was heard in the Supreme Court of New South Wales, where the court was tasked with determining whether indemnity costs should be awarded and if a gross sum costs order was necessary to ensure finality between the parties.

The court examined the conduct of the applicant throughout the litigation, focusing on the merit of the applications made and the impact of the litigation on the respondent. The legal issues at hand included the criteria for awarding indemnity costs and the circumstances under which a gross sum costs order might be appropriate. The court needed to assess whether the applicant's actions were vexatious or frivolous, and if so, whether such conduct justified the imposition of indemnity costs. Additionally, the court had to determine if a gross sum costs order was necessary to achieve finality and prevent further litigation between the parties.

The court found that the applicant's conduct warranted the imposition of indemnity costs due to the vexatious nature of the applications filed. The court considered the significant impact on the respondent, including wasted legal costs and the burden of defending multiple applications. The court concluded that a gross sum costs order was necessary to achieve finality and deter any future litigation between the parties. As a result, the court awarded indemnity costs and made a gross sum costs order in favour of the respondent.

The final orders included the applicant being required to pay the respondent's costs on an indemnity basis, along with a gross sum costs order to cover all costs incurred by the respondent in the litigation. The court emphasised the importance of finality in legal disputes and the need to protect parties from unnecessary and vexatious litigation.